Hey Snackers,
Best headline of the week: "Disney has no Fox left to give." After taking the "Fox" out of most of its recently-acquired 21st Century Fox assets, Disney is rebranding 20th Century Fox TV to... "20th Television." Someone give the marketing department a raise.
The S&P 500 index finished the day juuust off from its record closing high, boosted by stock gains from heavy hitters like Apple and Microsoft.
Lyft is (finally) back with plunged earnings and a possible suspension
Welcome baaack... Lyft has been hiding in the garage this year, with little to zero newsworthy updates to speak of. Yesterday, it made two big headlines (neither were particularly flattering). The 1st was unsurprising — everyone and their grandma expected rides to take a pandemic plunge:
- Lyft's sales plummeted 61% in the 2nd quarter as virus fears kept riders away (there was nowhere to Lyft to, anyway). Lyft had 8.7M active riders compared to 21M+ in the previous quarter.
- Rides jumped 78% in July compared with April, suggesting a recovery might be underway this quarter. But Lyft still has a long trip ahead (ETA: unknown).
It gets worse... A judge just ordered Lyft and Uber to treat CA drivers as employees instead of independent gig contractors. The ride-hail giants would have to provide benefits like overtime and sick leave, making employees (and rides) more expensive. They say that threatens to put them out of business.
- Lyft and Uber may shut down rides in California temporarily if the ruling isn't overturned. That would be tough for the many CA'ers who have never called a taxi in their lives (#UberEverywhere).
- The suspension would likely last until November, when voters decide on a ballot measure that would exempt gig drivers from being considered employees.
- But while Uber has a global footprint, US-focused Lyft depends on CA for 16% of its rides (not coming in clutch RN).
Lyft needs to do more... It's mostly a pure-play rides company, which doesn't help in a pandemic. Uber's Ride bookings similarly plunged 73%, but its Eats delivery bookings surged 113%. Lyft doesn't have a pandemic-friendly biz to hedge ride losses. Last quarter, Lyft forayed into grocery and meds delivery, and saw growth with its bike-sharing biz. It needs more of that.
Tesla shares surge after it announces its 1st-ever stock split
Waiting for an Elon tweet to drop... Tesla stock popped 13% yesterday, making Earth's most valuable car company even more valuable. The surge came after Tesla announced it's doing a 5-for-1 stock split. The e-car icon's stock has more than tripled in value since January — on August 28, each Tesla share will be cut up into 5:
- For owners: If you own 1 Tesla share that's trading at $1.5K, you'll suddenly have 5 Tesla shares worth $300. The value of your holding and ownership in the company doesn't change.
- For buyers: Companies split their stock to make it cheaper for retail investors (like us) to buy. A Tesla split makes the pricey stock more accessible, without changing the company's overall value.
Hyped over tiny pizza slices... Investors bought up Tesla after the announcement, making the stock surge. But the split itself doesn't change anything fundamental about Tesla's stock or market value. Even though the Tesla “pizza pie” has been cut into more slices, it’s still the same amount of pizza (with smaller, less caloric slices).
- In theory, splitting the stock could lead to a surge in buying (and consequently, a price surge) because more people can afford to invest.
- That's not as relevant now that more brokerages are offering fractional shares, allowing anyone to invest in a company like Tesla for just a few dollars. As these become more popular, stock splits become less impactful.
But splits aren't entirely useless... Investors might interpret them as signs of confidence. A company usually decides to split when it thinks its stock price is too high (likely, because it's performing well). To investors, that suggests the company is confident about the continued growth of its stock. Apple, which recently became the most valuable company on Earth, is also splitting its stock at the end of August (Apple's 5th split since 1987 — #Banana).
What else we’re Snackin’
- Sketch: TikTok reportedly tracked users' online data using a tactic banned by Google, adding more fuel to the "ban TikTok" fire.
- Conference: Cisco's sales dropped as businesses went WFH, hurting its office hardware sales (no desk phones).
- Stay: Airbnb's quarterly sales plunged 67% but showed signs of recovery — bookings were down just 30% in June compared to 70% in May.
- Moderate: Facebook, Google and other major tech companies form a coalition to fight disinformation ahead of the November election.
- Groce: Grocery giant Kroger is setting up an ecommerce marketplace to compete with Amazon and Walmart.
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Thursday
- Weekly jobless claims
- Earnings expected from NetEase
Disclosure: Authors of this Snacks own shares of Uber, Google, Amazon, Apple, and Walmart
ID: 1301775